A lot continues to happen with the automotive industry. New vehicle sales are bouncing back as inventory levels return to pre-pandemic levels. The resurgence of new vehicles is pushing prices and sales down for used vehicles. At the same time, consumers are moving away from electric vehicles in favor of cheaper gas-electric hybrid models.
The shift in consumer preferences and sales is requiring automakers to be nimble and adjust their strategies. After investing billions of dollars to transition to fully electric vehicles, automotive companies now find that they are having to aggressively pivot to sales of hybrids, as well as pickup trucks, which remain popular.
The shift comes after several difficult years for the auto industry that included not only the Covid-19 crisis but also a U.S. strike last fall by the United Auto Workers union. Despite the turmoil, automakers are adjusting and bouncing back. Here are three auto stocks to buy on the dip this month.
Ford Motor (F)
Ford Motor (NYSE:F) has bounced back nicely from last autumn’s strike. The Detroit automotive giant reported a surprisingly strong profit for this year’s first quarter due to robust sales of its commercial vehicles. Ford announced earnings per share of 49 cents, compared to 42 cents expected by analysts. Revenue totaled $39.89 billion versus $40.10 billion forecast on Wall Street. Despite the slight revenue miss, Ford’s sales were up 3% from a year earlier.
Earlier in 2024, Ford surprised investors and analysts by paying a special one-time dividend of 18 cents per share alongside the regular quarterly distribution of 15 cents a share. Ford’s regular dividend currently yields just over 5%, making it a hefty payout.
F stock also continues to look affordable, trading at only 12 times future earnings estimates. Ford stock is down 3% on the year and looks like a bargain at current levels.
Honda Motor (HMC)
To Japan now and automaker Honda Motor (NYSE:HMC). Not only is Honda known for making Civic sedans and Odyssey minivans, but the company also happens to be the world’s biggest manufacturer of motorcycles, a title it has held since 1959. Most recently, Honda reported a 70% increase in net profit as the company’s vehicle sales surged, particularly its gas-electric hybrid models.
Honda’s annual profit totaled $7 billion, and sales rose 21% during the fiscal year that ended March 31. The company said weak sales in China were offset by strong sales in the U.S. and Canada. Honda sold 2.8 million vehicles globally over the last year, up from 2.3 million in the previous fiscal year, with sales growing in Europe. Honda is finding success with hybrid vehicles, which are gaining popularity among consumers who are moving away from more expensive fully electric cars, trucks and SUVs.
HMC stock is up only 2% this year. Its stock looks even cheaper than Ford’s, trading at only 7 times future earnings forecasts. Plus, Honda pays a quarterly dividend of 44 cents, giving it a mighty yield of 5.6%.
General Motors (GM)
General Motors (NYSE:GM) is doing a lot to boost its share price, and it’s working. So far in 2024, GM stock is up 32%, outperforming nearly all other auto stocks. GM stock has been climbing higher on strong earnings and other supportive measures, including a new $6 billion stock buyback program. The new share repurchase comes as a $10 billion stock buyback program announced last November ends on June 30.
General Motors raised its 2024 guidance after beating Wall Street expectations with its first-quarter earnings. GM reported Q1 EPS of $2.62 versus $2.15 that was expected among analysts. Revenue came in at $43.01 billion compared to the $41.92 billion that was estimated. Sales rose 7.6% from a year earlier. The company now expects earnings of $9 to $10 a share, up from a previous range of $8.50 to $9.50 per share.
Strong North American sales, particularly of pickup trucks, have been largely responsible for GM’s strong earnings and upbeat outlook.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
